Letting dollars do the talking best solution for SH slums

Our City Council is considering ways to clean up local rentals in which conditions are, in a word, despicable.

As we report on page 15, council members are looking at crafting a “livability” ordinance modeled after one recently passed in Corvallis that would likely empower city officials to, in response to complaints and with a warrant, to inspect and force improvements to substandard housing. Depending on the landlord’s response, it could even shut down rental housing that doesn’t meet basic safety, sanitary and structural standards.

We’re all for improved housing in Sweet Home. That’s a no-brainer, given the wretched condition of many of the rentals in this town. Floors and walls have holes. Mold flourishes. An apt description of many would be “squalor,” and this squalor commands outrageous rental prices.

We recall one example, in 2011, where a disaster of a trailer (later destroyed by fire) rented for $560 per month, a higher housing payment than a typical mortgage on a three-bedroom house that year. Ridiculous, and no one should have to live in the conditions existing in that trailer.

But is another ordinance the right answer? We don’t think so, given that many of the conditions addressed in the Corvallis ordinance are already covered in Sweet Home’s existing regulations.

Plus, the real problem here is supply, which is far short of demand.

In Sweet Home, we haven’t seen new apartments constructed in a decade and no large-scale developments in the past two decades, at least. When demand for something increases but the supply doesn’t change, prices go up.

Ordinarily, the high profits would attract new suppliers, producing both quantity and higher quality. Developers are in business to make money and there’s a market right here.

But public policy and regulation that can get in the way of new suppliers tend to protect high profits for those already engaged in the market – creating what is known as “crony capitalism.”

We think the City Council could better serve the public interest by figuring out ways to encourage local development of quality low-cost housing – units that will leave those shacks vacant and eventually remodeled or replaced.

There are a lot of issues percolating in this situation. We certainly recognize that occupants are to blame for at least some of the problems posed by substandard housing in our community.

But we have doubts that a livability code is going to solve problems already addressed by existing ordinances.

One on the city books, for instance, allows city officials to shut down use of a rental property after a given number of police responses to that location.

That was the motivation for a Salem real estate broker’s appearance before the City Council last week, to ask the city to enforce laws already on the books (see page 1). The broker told council members that he had recently purchased apartments on Nandina Street and had already kicked out five residents who were behaving badly. He’s remodeling the apartments and he’s concerned about one particular neighboring property where police frequently respond and where conditions are poor, to say the least.

To be frank, the laws that already exist haven’t done much to clean up the slums in Sweet Home. So would a new one make a difference?

The existing ordinance might have an impact. The city just started the process against the subject property beginning this month.

Fortunately, it’s not the kind of thing that gets in the way of development although shutting a place down could temporarily reduce the total number of available rental units.

With regard to issues addressed in the proposed ordinance, we believe market pressures would be a lot more effective in providing quality housing and we’re not the only ones. In fact, the remodeling of apartments on Nandina Street just this year is a good example.

Economists of multiple political stripes see this.

When Paul Krugman agrees with us and free-market economists about public policy, it’s probably time to pay attention.

Krugman is a Nobel Prize-winning economist, a so-called progressive who is no friend of free markets. He writes a blog for the New York Times and is known for his theories on international trade and how countries can compete with one another in trade.

In this case, though, he lines up with free-market economists in asserting that the reason housing is so unaffordable these days is because of regulation and public policies that push up the cost of housing.

Enforcing the existing codes may help motivate the owner of the offending property on Nandina Street, referenced by the landlord from Salem, to make improvements.

But if other, better, housing becomes available in Sweet Home – if new, affordable apartment housing were constructed and people started moving out of the dumps, owners of offending properties would feel more economic pressure to clean up their acts. When they start feeling it in their wallets, their reaction might be a lot more positive than it would be if the city cited them.

That’s a win-win for the city. It’s similar to the proverbial “paint-your-house-and-your-neighbors-will-follow-suit” principle.

We’ll note, too, that city laws were not the impetus for the clean-up at Kingwood Apartments, also on Nandina Street. There, a neighbor now reviews rental applications on behalf of the landlord, and conditions have improved noticeably.

Yes, laws can solve problems.

The arrival of a nasty letter from the city could force a landlord to clean up. But a much more positive, healthy and long-term solution would be for the city to encourage responsible developers to cash in on the need here for housing and to motivate landlords of wretched properties to either clean up or do something else with their land, like sell it to someone with the desire to do something more constructive with it.